Rare earth metals are an increasingly integral part of everything from automobiles to television sets. But the precious metals are tightly controlled by China, with an excess of 95 percent of current suplly coming from Chinese-owned mines and refineries. The degree of control has allowed China to manipulate prices, cutting back on demand to sell less material for the same amount of profit, any businessperson's dream.

The problem is that it takes several years or more to bring rare earth metal mines and refineries online; and the capital costs of such facilities are very high. It took China decades of clever planning to set itself in its current peachy position of rare earth hegemony. Now the U.S. is racing to try to recover, before Chinese price manipulation deals too much of a blow to the U.S. economy.

Top targets for domestic rare earth production include neodymium -- used in neodymium iron boron (NeFeB) hard drive magnets and cell phone components -- and samarium -- used in samarium cobalt (SmCo) drive magnets. Currently the U.S. has no domestic neodymium producers and only one domestic samarium producer.

The U.S. has no domestic producers of neodymium magnets. [Source: ThinkGeek]

The Government Accountability Office (GAO) in a 2011 research report [PDF] suggests that the U.S. rare earth supply chain, phased out in the 1980s at a time when the 17-element family looked non-critical, will take approximately 15 years to rebuild. The new lab aims to assist in that slow and arduous recovery.

If China wants to take over rare metals, first it must subsidize the hell out of such operations and dump cheap product on the market. That’s expensive, and they essentially shoot one sector of the economy to help another. They lose in that equation, and the world wins cheap material.

But long term, they drive the competition out of business. Establish a monopoly. Spike prices and reap huge rewards. That earlier shot in the foot pays off. They win, and the world suffers.

But what’s supposed to happen next, and will happen, is that people invest in mines as its profitable again. It might take a few years to get going, but it will. This will negate the monopoly, and China is back to a losing situation, as they need to subsidize again to establish control. The cycle continues.

I don’t see why the US gov needs to partake in this game. It seems foolish. If they really want to end it, wouldn’t it be easier to just tell China that If they dump subsidized crap on the market, you’ll just smack them with import restrictions and taxes? Why start your own subsidy program? Just cut them out of the market.

They're not even addressing that part! That's like batteries, the EPA has been crushing US battery manufacturers for decades and then suddenly everyone is complaining why no US battery companies make new products!

Good luck getting permits for new mines and operations under the current regime. Sure they'll talk a good talk . . . until the Environmental Impact Report arrives.

More like battery producers were crushing batteries into local water supplies.

Look at the ridiculous instances of lead poisoning in Mexico as a result of the battery recycling programs there, and you'll have an idea why we kicked that load of toxic mess overseas.

If domestic industry had innovated and figured out cost-effective green and best-practices before causing birth defects and mental retardation in US townships all over the country, then we wouldn't have been forced to abolish it altogether. Sad, but not the fault of regulation.

Its actually the fault of financialization - as more and more corporations adopted a publicly traded, earnings-per-share based accounting methodology, the focus on reinvesting into the company to generate tangible growth transformed into an incentive to inflate earnings numbers to reap a quarterly profit from the market.

This trend is especially strong among executives, as their compensation is usually in stock options. As long as the market likes your earnings numbers, you can make money every month, despite the lack of ACTUAL growth (new jobs added, markets entered, factories opened, innovation created).

In fact the opposite is now true for most firms; the more people you can fire, manufacturing you can avoid/outsource/offshore, the more small towns you can close with a single factory closure, the better Wall Streen investment firms like your stock.

The biggest rare earth consumer used to be NiMH batteries, using cerium, lanthanum, and neodymium. Lithium ion batteries don't need rare earths. Same thing with motors/generators. With modern electronics, induction motors lose most of the drawbacks of their complicated operation, and they don't need any rare earths since they have no permanent magnet.

China's control over rare earth supply is an overblown problem. There aren't a whole lot of truly critical uses without substitutions available.

The automotive industry relies on motors that use rare-earth permanent magnets. And no, I don't mean hybrid cars only, but also motors used in electric steering systems. And it's not neodymium alone, but dysprosium too. Even if it's a secondary ingredient, "rumor" has it that growing prices are enough to push companies (or at least departments) out of business.Also, I think that China's natural supplies are extinguishing but I can't vouch for it. The Wikipedia article on dysprosium mentions that the automotive industry is the principal consumer.

All the economic theories in the world amount to nothing if hard facts are ignored.

The above is based on direct experience, except where otherwise noted.

"They dump the radioactive waste on their own people." Whats the difference between that and Air, Water and Ground Pollution in the US. No different then the towns built over top of toxic waste dumps in the US.